China correspondent for Fairfax Media

Hochtief can acquire 3 per cent of Leighton every six months. Photo: Bloomberg

The Spanish-controlled German construction group Hochtief has flouted its long-standing governance agreement with Leighton Holdings, inching its stake up to 54.96 per cent and announcing an intention to buy more shares in the contractor.

In a letter to Leighton chairman Bob Humphris, Hochtief chief executive Marcelino Fernandez Verdes said his company had acquired 4.8 million shares and intended to acquire more ''in the near term'', without specifying how much it plans to increase its stake. Hochtief had previously owned 54.5 per cent of Leighton.

Hochtief can acquire 3 per cent of Leighton every six months, under Australian law.

The on-market share purchase signals an intention to break a long-standing, but non-binding, corporate governance arrangement between Hochtief and Leighton, which specifies the German group would not increase its holdings above 55 per cent.

The agreement was reaffirmed in November 2010 when there was much consternation about ACS' intentions as it launched a hostile takeover of Hochtief.

The latest revelation reignites concerns that ACS' original bid for Hochtief was to gain control of Leighton, the jewel in the German group's crown. Debt-laden ACS has been selling off assets to de-gear its balance sheet, while Hochtief has struggled to grow amid the extensive debt crisis consuming Europe.

But in his letter to Leighton, Mr Fernandez Verdes said the acquisition of Leighton shares was ''consistent with Hochtief's stated position'' as a long-term shareholder, and that it represented an ''excellent investment'' particularly in the current market environment.

Mr Humphris said Hochtief confirmed at a recent board meeting that it continued to support the independence of Leighton's board.

"We have enjoyed a long and beneficial relationship with Hochtief. Hochtief has a firm belief in Leighton's ability to create value for all shareholders and we believe that will continue," he said.

In March, Leighton's former chairman, Stephen Johns, and two independent directors, Wayne Osborn and Ian Macfarlane, quit in anger over perceived interference from Hochtief in the appointment of a new independent director and a broader ''breakdown in relations with the major shareholder''.

The fallout forced Hochtief to reaffirm its commitment to its corporate governance agreement with Leighton, but it emphasised that it had the option to alter the terms of the agreement at any time.

Shares in Leighton have copped a beating along with other contractors with exposure to the resources industry. Shares in the group closed at $15.45 on Friday, 36 per cent down since February, just as the contractor was rebuilding its credibility with investors after a horror two-year stretch of project delays and cost blowouts.